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Using a Competitor's Trademark as a Keyword for AdWords is Not Trademark Infringement

1-800 Contacts, Inc. v., Inc. By Casey Holzapfel – Edited by Michelle Sohn 1-800 Contacts, Inc. v., Inc., No. 11-4114, -4204, -4022 (10th Cir. July 16, 2013) Slip opinion [caption id="attachment_3585" align="alignleft" width="150"] Photo By: Danard Vincente - CC BY 2.0[/caption] The United States Court of Appeals for the Tenth Circuit held that the use of a competitor's trademark as a keyword that activates sponsored links in Google's search engine is not trademark infringement. 1-800 Contacts, Inc. v., Inc., No. 11-4114, -4204, -4022 (10th Cir. July 16, 2013). The court affirmed the lower court’s summary judgment to defendant with respect to 1-800 Contacts' claim that was directly liable for misdirecting customers to click on links to after searching for the phrase “1-800 Contacts.” Id. at 4. JDSupra provides an overview of the opinion. Techdirt critiques in detail the Tenth Circuit's reasoning. JOLT notes that U.S. trademark law does not accurately reflect the actual risk of customer confusion in keyword advertising. Since 2003, “1800CONTACTS” has been a federally registered trademark of the company 1-800 Contacts. Id. at 4–5. In 2005, 1-800 Contacts discovered that had paid Google to show as a sponsored link when the phrase “1800 Contacts” and other similar phrases were searched for on Google's search engine. Id. at 5. was able to do this through Google’s AdWords program, which allows an advertiser to display ads through sponsored links by reserving a particular search word or phrase. Id. at 5–6. 1-800 Contacts brought a claim under the Lanham Act, the primary source of federal trademark law. Under the Lanham Act, an infringement claim contains three elements:  (1) the plaintiff has a protectable interest in the mark; (2) the defendant has used an “identical or similar” mark; and (3) the defendant's use of the mark is likely to cause confusion among customers. Id. at 12. The United States District Court for the District of Utah found that 1-800 Contacts did not raise an issue of material fact with respect to the third element and consequently awarded summary judgment to Id. at 3. 1-800 Contacts appealed the district court's judgment, claiming that although did not use 1-800 Contacts' trademark in its displayed ads, the purchase of keywords matching 1-800 Contacts' trademark caused “initial-interest confusion” in customers, resulting in their clicking on a link to's website when their original interest was in visiting 1-800 Contacts' website. Id. at 22. Initial-interest confusion occurs when a consumer initially searching for the plaintiff’s product, subsequently confuses the defendant’s and the plaintiff’s products because the trademarks are similar or identical. By the time the confusion is dispelled, the consumer has chosen to buy the defendant’s product. Due to the similarity or identical use of a trademark, the defendant essentially lures the plaintiff’s consumers away. Id. at 25. In its determination that initial-interest confusion was unlikely to occur in customers that searched for “1800 Contacts,” the Tenth Circuit focused on the percentage of customers that actually clicked on the sponsored link to after such a search (the “clickthrough rate”). The court held, “This number [1.5%] cannot support an inference that’s keyword activity was likely to ‘lure[]’ consumers away from 1-800.” Id at 26 (emphasis in original) (quoting Australian Gold v. Hatfield, 436 F.3d 1228, 1238 (10th Cir. 2006)). As Techdirt notes, this case may have constructed a nearly insurmountable barrier for plaintiffs in keyword advertising litigation. Sponsored links rarely have clickthrough rates above 10%, which is typically necessary for courts to find that customer confusion is likely to occur. With such a high standard for proving customer confusion, companies may continue to use competitive keyword advertising with few concerns of future litigation.